Highland Pellets recently started up its new plant to produce wood fuel pellets for markets in Europe. Peterson Pacific has been a key supplier for the new mill, along with parent company Astec Industries, with its machines providing the feedstock the plant needs pending completion of its permanent chip mill.
Highland Pellets, headquartered in Boston, was founded by Tom Reilley, who was a senior managing director for former investment banking firm Bear, Stearns and went to London in 2002 to set up and head the company's wealth management division. He later left the company to form an investment firm and private equity fund but exited his stake in 2012 and returned to the U.S.
Tom was approached by Rob McKenzie, now managing director for Highland Pellets, in 2011 about the business opportunity presented by the wood fuel pellet industry. Rob worked in the United Kingdom wholesale power market for 16 years and had considerable experience in renewable energy, energy trading, and developing new business opportunities. For example, he established a U.K. power and gas trading desk in London for U.S.-based global conglomerate Cargill.
Another key member of the Highland Pellets team is Alex Adome, director of finance, who previously worked with Rob at Cargill, where he held various roles in its energy enterprise and a wholly-owned hedge fund. His duties at Highland Pellets have included financial modeling and business development support.
After research and securing a location, financing, and contracts with markets for its production, the company chose Wagner Construction to build a plant near Pine Bluff, Arkansas. Wagner completed the project within 18 months — on time and under budget.
“We have built a strong team that has exceptional expertise in energy markets, risk management, project finance, construction and forestry,” said Rob McKenzie, managing director.
The production facility is located on 203 acres. Most of it is in the open except for the pellet mills, a workshop, and an office building. All the conveyors and wood fuel for the furnace are enclosed. Most of the site is occupied by a two-mile, double-loop rail track that enables the company's pellets to be delivered in bulk form to the Port of Greater Baton Rouge in Louisiana for shipping to Europe. Fifty people work at the mill, but that number will increase to 68 once it is in full production by year's end.
The plant began production in December. When it reaches full capacity, it will be able to produce about 600,000 metric tons of pellets annually. All of its production is under contract to be supplied to markets in Europe.
Management's strategy has been to partner with best-in-class companies to reduce or eliminate as much risk as possible in the supply chain, from tree to delivery of pellets. Highland Pellets chose Astec as a principal supplier because it manufactures most of the pellet facility equipment itself, ensuring compatibility in all segments of the production process. Other suppliers may source different parts of the production process from different companies and subsequently try to make the interfaces compatible.
Astec also uses a modular design. Each production line will produce about 150,000 metric tons annually, and the Pine Bluff plant has four of these lines. The modular design enables a faster route to market, less risk, and much greater security of supply; if one production line goes down, the other three can continue. There is no single point in the manufacturing process that would stop all production if there was a critical failure. For example, another plant may be out of production for weeks if the drying system goes offline.
Astec supplied the vast majority of the plant equipment — such as conveyors, drying equipment, and more — from their own group of Astec companies, allowing them to pre-engineer the entire plant.
Some individual machinery and equipment was supplied by other well-known names in the industry. Progress Industries equipped the plant for processing round wood. Hammermills were provided by Schutte Buffalo, and the pellet-making equipment was supplied by Andritz.
“What makes the Pine Bluff facility different is the design concept in how this equipment is structured,” said Jody Doak, plant manager. “Astec has designed the facility with four independent lines, which means redundancy and reliability.” That redundancy keeps production downtime to a minimum.
Redundancy is even built into each production line. For example, four pellet mills are required for each line for full production rates, but five pellet mills are supplied. The spare gives the plant the ability to maintain optimum production with minimal negative impact should a piece of equipment fail.
“While we cannot have a spare for every step of the process, Astec has done a great job at identifying areas more prone to production challenges and designed around it,” said Jody.
Peterson supplied two key machines to get the plant up and running. The wood yard was not completed until after two production lines began operation; it was scheduled later to allow enough space for delivery and construction of the Astec equipment.
“Once the mill was largely built we could finish off building the cranes for the wood yard,” explained Jody. “This meant that we needed a short-term solution to processing wood prior to completion of the wood yard.”
The solution was supplied by Peterson: a Peterson 4810F flail to debark logs and Peterson 4300B whole-tree chipper. The machines have proven “highly effective,” according to Jody.
“Using the Peterson equipment for our debarking and chipping needs has given us the ability to generate the needed fiber for start-up…while we await the completion of our permanent chip mill. The equipment has been reliable and versatile in the sense that we can move it around the wood yard as needed to maximize the storage space on the ground.”
In the wood fuel pellet industry, the trend has been to use microchips — tiny chips ranging from ⅛-inch to ⅜-inch — for feedstock in the manufacturing process.
Peterson manufactures flails, chippers, grinders, screens, stacking conveyors and other equipment. Peterson drum chippers have proven themselves in capacity and reliability for applications for high production of uniformly sized microchips in the field. In addition, the portable equipment is an effective back-up for on-site pellet mill chipping if a mill chipper is down for maintenance or repairs or the mill requires additional chip production.
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